Trade Mark News & Information

Trademark Lawyers Australia – Federal Court – Anchorage Capital

Anchorage Capital Partners Pty Limited v ACPA Pty Ltd and Anchorage Capital Group LLC [2015] FCA 882 (21 August 2015)

Anchorage Capital Partners Pty Limited failed to make out its allegations that a US company and its Australian subsidiary infringed its registered trade mark rights, or engaged in misleading or deceptive conduct, by using names containing the word ANCHORAGE in the financial field.

The applicant, Anchorage Capital Partners Pty Limited is an Australian company which commenced operations in Sydney in 2007 and its business involves raising money from professional investors to acquire a controlling interest in struggling businesses, fix them up and then to on-sell those businesses at a profit. It obtained trade mark registrations for ANCHORAGE, ANCHORAGE CAPITAL and ANCHORAGE CAPITAL PARTNERS with effect from 26 May 2011 for  “Acquisition for financial investment; administration of financial affairs; advisory services relating to financial investment; conducting of financial transactions; financial advisory services for companies; asset management; financial fund management; financial investment management services; financial transaction services; all the aforementioned services targeted towards special situations and mismanaged or underperforming companies to help improve their financial performance”.

The second respondent is a US company, Anchorage Capital Group LLC, which commenced operations in New York in 2003 and its business also involves raising money from professional investors, but for the purpose of acquiring distressed debt or equity positions at a discount to their true value and then disposing of them at a profit when the true value is later realised. In 2011, it set up the first respondent, ACPA Pty Limited as its Australian subsidiary.

Complications arose when the applicant moved offices in June 2013 to the very same building as the first respondent which already had signage in the lobby showing ‘ACPA a subsidiary of Anchorage Capital Group LLC’. The first respondent subsequently agreed to remove this signage and this was done in September 2013.

The applicant alleged that the respondents infringed its registered trade marks through use of the names ANCHORAGE, ANCHORAGE CAPITAL and ANCHORAGE CAPITAL GROUP (the ‘US ANCHORAGE names’) and email addresses of the form and (the ‘ANCHORAGE email addresses’) in the provision of financial services in Australia.

Perram J found that the second respondent had, from 2003 engaged in substantial investment activities in Australia using the US ANCHORAGE names, including through use of correspondence with email addresses ending with which involved use of the word ANCHORAGE for the purpose of acquiring equity or debt interests in local Australian businesses. Further, the first respondent used the words ANCHORAGE and ANCHORAGE CAPITAL through use of business cards bearing the words ‘ACPA in association with Anchorage Capital Group LLC’ and email correspondence with addresses ending with  in assisting the second respondent with its transactional work in Australia after June 2011.

The evidence also disclosed that the second respondent had, in early 2007 and prior to the Applicant commencing business, made limited attempts to raise funds, but did not engage in any fund raising in Australia after the 26 May 2011 priority date of the applicant’s trade mark registrations.

Perram J found no infringement, but the reasons given were not entirely clear.

His Honour considered the second respondent’s use of the US ANCHORAGE names was substantially identical or deceptively similar to all three of the Applicant’s registered trade marks. In particular, ANCHORAGE is identical to ANCHORAGE, Anchorage Capital Group LLC is deceptively similar both to ANCHORAGE CAPITAL and ANCHORAGE CAPITAL PARTNERS. The email address is deceptively similar to ANCHORAGE CAPITAL, but is not. Also, the use of ‘ACPA Pty Ltd a subsidiary of Anchorage Capital Group LLC’ is not deceptively similar to any of the Applicant’s registered trade marks.

However, his Honour then went on to find that the respondents “were not using the US ANCHORAGE names as trademarks to distinguish their services because they were not dealing with or providing services when they used the names. Their use was not trademark use – The US ANCHORAGE names were not being used as a badge of origin in the sense that they were not being used to indicate a connexion in the course of trade between the only service actually provided by the second respondent, that of funds management, and the second respondent. There is simply no evidence that either respondent provided any of their funds management services to anyone in Australia after the priority date. What they have done is trade in their own names. This is not trade mark use.”

It appears Perram J reached the conclusion that infringement did not arise because the respondents were not using the US ANCHORAGE names or the ANCHORAGE email addresses as signs in a trade mark sense. However, it is curious that his Honour firstly discussed the deceptive similarity issue at all. His Honour also seems to have characterised the second respondent as a funds manager, but it is unclear why he previously identified investment and fund raising as the two aspects of its business, particularly as his Honour did find that the second respondent has engaged in substantial investment activities in Australia before and after the relevant 26 May 2011 priority date.

Some clarification is provided later in the judgment, specifically at paragraphs 35, 42 and 47 where Perram J indicated the respondents “were not providing services by passively investing in Australian businesses” and the investment activities in Australia “did not involve the conduct of a business here”.

In case he was wrong on the infringement issue, Perram J then considered whether any defences to infringement were available to the respondents. His Honour would have accepted the first respondent had a defence through its use of ‘ACPA a subsidiary of Anchorage Capital Group LLC’ being in good faith to indicate a characteristic of the first respondent’s services, namely the relationship between those services and the second respondent as its subsidiary. However, this defence was not open where the first respondent used the US ANCHORAGE names in the course of its dealings with third parties in Australia because it did not, in that situation, identify itself as a subsidiary of the second respondent.

His Honour also considered that the second respondent would have a defence under s122(1)(a)(i) that it had used the marks in good faith as its own name. The use of ANCHORAGE, ANCHORAGE and ANCHORAGE CAPITAL GROUP were all uses of its own name. Perram J considered that, depending on the context, a contraction of a full name may be use of a name akin to leaving off expressions such as ‘Ltd’. His Honour also would have accepted a defence under s122(1)(f) and s122 (1)(fa) based on the second respondent being entitled to register its names as trade marks

To make matters worse for the Applicant, Perram J found that the respondents were not estopped by their acquiescence from seeking to remove the applicant’s registered trade marks. Indeed his Honour found the ANCHORAGE and ANCHORAGE CAPITAL trade marks were improperly registered because the applicant was not entitled to assert ownership of them due to the second respondent having earlier use of the trade marks ANCHORAGE, ANCHORAGE CAPITAL and ANCHORAGE CAPITAL GROUP on slides promoting its fund management services to prospective Australian investors in 2007; although his Honour reached the view that none of the marks used by the second respondent were substantially identical to the applicant’s ANCHORAGE CAPITAL PARTNERS trade mark, so that mark was properly registered. Further, if his Honour was wrong on the infringement question and use by the second respondent of the US ANCHORAGE names was trade mark use, then that would constitute more prior use which would defeat the applicant’s ownership claim.  Rather curiously, Perram J did not discuss whether the fund management services provided by the second respondent were the ‘same kind of thing’ as the applicant’s services, particularly as his Honour did accept, from the outset, that the respective businesses of the parties were different.

The applicant contended that any prior use by the second respondent was unlawful because it involved dealing in financial products without an Australian Financial Services Licence contrary to the Corporations Act. However, Perram J rejected this contention for at least two reasons. First, his Honour did “not accept the fact that a business was acting illegally in some ways provides a defence to a claim relating to its trade marks. The use of the US ANCHORAGE names was not a breach of the Corporations Act. Secondly, the second respondent’s investment activities in Australia did not involve the conduct of a business here so that they cannot constitute the conduct of a financial services business even if they were providing a financial service”.

Perram J felt obliged to follow earlier authority that the decision to remove a registered trade mark under s88 (1) involves a discretion and requested further submissions from the parties on the exercise of this discretion; although his Honour did make some comments concerning the applicant’s decision in 2007 to adopt the Anchorage Capital name and its state of knowledge concerning the existence of the second respondent.

Finally, the allegations of misleading or deceptive conduct under the Australian Consumer Law also failed. The relevant consumers of the parties’ services are those sophisticated institutional investors who invest money in their respective funds. Perram J considered that “the idea that these kinds of finance houses would have invested tens of millions of dollars into the wrong fund because of the similarity in names is implausible